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Albertsons Companies (ACI)
NYSE:ACI
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Albertsons Companies
(NYSE:ACI)
Rating:71Outperform
Price Target:―
Positive Factors
Business Strategy
ACI's ability to leverage its digital media capabilities, invest in new store openings and upgrades, and expand its loyalty program to drive accelerating growth in pharmacy and e-commerce sales and in-store traffic enable it to perform well.
Operational Performance
Management has a proven history of productivity gains and successful long-term strategy execution in eCommerce, which supports an upside case.
Valuation
ACI may see valuation expansion from low levels as investors seek cheap, defensive stocks.
Negative Factors
Digital Transformation
ACI remains at a discount given it is behind in digital and centralizing of processes.
Earnings Guidance
EPS guidance of $2.03-2.16 fell short of the $2.28 consensus and $2.30-ish market bar.
Profitability
Mix shift to eCommerce and Pharmacy continues to pressure margins for the time being.
Albertsons Companies (ACI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.72B
Dividend Yield2.44%
Average Volume (3M)5.93M
Price to Earnings (P/E)13.5
Beta (1Y)0.08
Revenue Growth1.46%
EPS Growth-26.54%
CountryUS
Employees108,300
SectorConsumer Defensive
Sector Strength75
IndustryGrocery Stores
Share Statistics
EPS (TTM)0.46
Shares Outstanding575,749,900
10 Day Avg. Volume4,488,025
30 Day Avg. Volume5,934,409
Financial Highlights & Ratios
PEG Ratio3.48
Price to Book (P/B)3.72
Price to Sales (P/S)0.00
P/FCF Ratio13.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$24.45Price Target Upside10.63% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
Albertsons Companies Business Overview & Revenue Model
Company DescriptionAlbertsons Companies, Inc., through its subsidiaries, engages in the operation of food and drug stores in the United States. The company's food and drug retail stores offer grocery products, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. It also manufactures and processes food products for sale in stores. As of February 26, 2022, it operated 2,276 stores under various banners, including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw's, Star Market, United Supermarkets, Market Street, Haggen, Kings Food Markets, and Balducci's Food Lovers Market; and 1,722 pharmacies, 1,317 in-store branded coffee shops, 402 adjacent fuel centers, 22 distribution centers, and 20 manufacturing facilities, as well as various digital platforms. The company was founded in 1860 and is headquartered in Boise, Idaho.
How the Company Makes MoneyAlbertsons Companies generates revenue primarily through the sale of groceries and pharmacy products in its retail stores. A significant portion of its income comes from its extensive portfolio of private label brands, which offer higher margins compared to national brands. Additionally, Albertsons earns money through its pharmacy services, which include prescription medications and healthcare products. The company also benefits from strategic partnerships with suppliers and manufacturers, as well as promotional activities and loyalty programs that drive customer engagement and sales. Other revenue streams include fuel centers and digital sales, as Albertsons expands its e-commerce capabilities to meet the growing demand for online grocery shopping.
Albertsons Companies Financial Statement Overview
Summary
Albertsons Companies shows strong revenue growth and operational efficiency, supported by solid cash flow management. However, high debt levels pose potential risks, particularly in adverse economic conditions.Income Statement
Albertsons Companies has demonstrated consistent revenue growth over the years, with a TTM revenue increase to $79.93 billion. The gross profit margin for TTM is strong at 27.79%, and while the net profit margin has seen a decline to 1.30%, it remains positive. EBIT and EBITDA margins are stable, reflecting operational efficiency. However, the slight decrease in the EBIT margin from prior years highlights some pressure on operational costs.82
Very Positive
Balance Sheet
The balance sheet showcases a high debt-to-equity ratio of 4.22, indicating significant leverage, which poses a financial risk. However, the return on equity has improved to 30.81%, reflecting efficient use of shareholder funds. The equity ratio is lower at 12.62%, suggesting a reliance on debt financing, which could be risky during economic downturns.75
Positive
Cash Flow
Cash flow analysis reveals positive trends, with free cash flow growth of 36.00% in the latest TTM period, indicating strong cash management. The operating cash flow to net income ratio is healthy at 2.22, suggesting efficient cash generation relative to net income. Despite a high level of capital expenditures, the company maintains a solid free cash flow to net income ratio of 0.82.78
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 79.93B | 79.24B | 77.65B | 71.89B | 69.69B | 62.46B | Gross Profit |
| 22.21B | 20.43B | 21.76B | 20.72B | 20.41B | 17.59B | EBIT |
| 1.87B | 2.07B | 2.31B | 2.44B | 1.62B | 923.80M | EBITDA |
| 3.43B | 4.54B | 4.80B | 4.89B | 3.79B | 3.19B | Net Income Common Stockholders |
| 1.04B | 1.30B | 1.51B | 1.62B | 850.20M | 466.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.13B | 188.70M | 455.80M | 2.90B | 1.72B | 470.70M | Total Assets |
| 25.76B | 26.22B | 26.17B | 28.12B | 26.60B | 24.74B | Total Debt |
| 12.57B | 14.24B | 14.96B | 14.03B | 14.47B | 14.68B | Net Debt |
| 11.44B | 14.05B | 14.51B | 11.12B | 12.75B | 14.21B | Total Liabilities |
| 23.59B | 23.47B | 24.56B | 25.10B | 25.27B | 22.46B | Stockholders Equity |
| 2.17B | 2.75B | 1.61B | 3.02B | 1.32B | 2.28B |
| Cash Flow | Free Cash Flow | ||||
| 907.80M | 628.20M | 700.00M | 1.91B | 2.27B | 428.80M | Operating Cash Flow |
| 2.85B | 2.66B | 2.85B | 3.51B | 3.90B | 1.90B | Investing Cash Flow |
| -1.83B | -1.75B | -1.98B | -1.54B | -1.57B | -378.50M | Financing Cash Flow |
| -1.04B | -1.18B | -3.37B | -789.50M | -1.04B | -2.01B |
Albertsons Companies Technical Analysis
Positive
22.10
Price Trends
21.68
Positive
20.95
Positive
19.86
Positive
Market Momentum
0.09
Positive
53.38
Neutral
51.72
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ACI, the sentiment is Positive. The current price of 22.1 is above the 20-day moving average (MA) of 21.99, above the 50-day MA of 21.68, and above the 200-day MA of 19.86, indicating a bullish trend. The MACD of 0.09 indicates Positive momentum. The RSI at 53.38 is Neutral, neither overbought nor oversold. The STOCH value of 51.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ACI.
Albertsons Companies Risk Analysis
Albertsons Companies disclosed 43 risk factors in its most recent earnings report. Albertsons Companies reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
We have incurred significant transaction costs in connection with the terminated Merger which we may not be able to recover, and which could adversely affect our business, financial results and operations. Q4, 2024
2.
If we cannot successfully recruit and retain qualified personnel our operating results and stock price may suffer. Q4, 2024
Albertsons Companies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $15.99B | 36.79 | 35.74% | ― | 15.51% | 53.77% | |
71 Outperform | $12.72B | 13.46 | 31.26% | 2.44% | 1.46% | -26.54% | |
68 Neutral | $1.11B | 18.38 | 4.00% | 1.10% | -7.79% | -64.85% | |
68 Neutral | $45.67B | 18.67 | 26.59% | 1.82% | -1.94% | 23.94% | |
64 Neutral | $8.82B | 14.56 | 4.78% | 173.92% | 3.50% | 2.20% | |
61 Neutral | $1.98B | 18.46 | 7.54% | 1.85% | 1.76% | 6.01% | |
60 Neutral | $1.30B | 78.92 | 1.43% | ― | 10.37% | -73.84% |
* Consumer Defensive Sector Average
Performance Comparison
ACI
Albertsons Companies
22.10
2.28
11.50%
IMKTA
Ingles Markets
59.91
-11.70
-16.34%
KR
Kroger Company
68.59
17.38
33.94%
WMK
Weis Markets
73.59
10.23
16.15%
SFM
Sprouts Farmers
163.43
84.49
107.03%
GO
Grocery Outlet Holding
13.29
-8.71
-39.59%
Albertsons Companies Earnings Call Summary
Earnings Call Date:Apr 15, 2025
(Q4-2024)
| % Change Since: 3.17%|
Next Earnings Date:Jul 29, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment. While Albertsons reported strong growth in E-commerce, loyalty programs, and pharmacy revenue, as well as significant productivity savings and shareholder returns, the company faces challenges with gross margin pressure, declining adjusted EBITDA and EPS, inflationary headwinds, and potential tariff impacts.Q4-2024 Updates
Positive Updates
Strong E-commerce and Loyalty Growth
E-commerce grew 24% in the fourth quarter and the full year, with first-party far outpacing third-party growth. Loyalty membership grew by over 15% year-over-year to more than 45 million members.
Pharmacy Revenue Increase
Pharmacy revenue increased 18% year-over-year, driven by industry-leading script and immunization growth, and best-in-class customer satisfaction scores.
Productivity and Cost Savings
From fiscal year 2025 through fiscal year 2027, Albertsons expects to deliver $1.5 billion in productivity savings, which will be reinvested in growth initiatives and customer value propositions.
Albertsons Media Collective (AMC) Expansion
AMC is expected to grow faster than the retail media market, with significant investments to improve both endemic and non-endemic brand reach.
Capital Allocation and Shareholder Returns
Albertsons returned approximately $87 million to shareholders through dividends and repurchased $83 million of common stock in Q4 2024. The company plans to complete a $2 billion share repurchase program over the next three years.
Negative Updates
Gross Margin and SG&A Pressure
Gross margin decreased by 45 basis points due to strong growth in Pharmacy sales and increased digital volume-related delivery costs. SG&A expenses also increased due to business transformation costs.
Adjusted EBITDA and EPS Decline
Q4 2024 adjusted EBITDA was $855 million compared to $916 million last year, and adjusted EPS was $0.46 compared to $0.54 in the fourth quarter of 2023.
Inflationary Headwinds and Consumer Behavior
Inflationary pressures have elevated customer needs for value, with a shift towards value and promotional items. SNAP customers are experiencing more pressure, affecting consumer behavior.
Tariffs and Cost of Goods Concerns
The potential impact of tariffs remains a concern, as Albertsons procures more than 90% of products domestically, but ingredient sourcing from tariff-impacted areas could affect costs.
Company Guidance
In the Albertsons Companies Fourth Quarter and Fiscal Year-End 2024 earnings call, guidance for fiscal year 2025 was highlighted with several key metrics. The company projected identical sales growth ranging from 1.5% to 2.5%, assuming inflation of 1.5% to 2%. Adjusted EBITDA is expected to be between $3.8 billion and $3.9 billion, with approximately $65 million related to the fiscal year's 53rd week. Adjusted EPS is anticipated to be in the range of $2.03 to $2.16, including a $0.03 contribution from the 53rd week. Capital expenditures are forecasted to be between $1.7 billion and $1.9 billion. The company aims to achieve $1.5 billion in productivity savings from fiscal 2025 through fiscal 2027, which will be reinvested into growth initiatives and to offset inflationary pressures. Additionally, Albertsons plans to continue investing in digital growth, the Albertsons Media Collective, Health and Pharmacy, and operational technology to enhance customer engagement and value proposition.Albertsons Companies Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Albertsons Companies Announces CEO Vivek Sankaran’s Retirement
Neutral
Mar 3, 2025
Albertsons Companies announced the retirement of CEO Vivek Sankaran, effective May 1, 2025, with Susan Morris, the current Executive Vice President and Chief Operations Officer, set to succeed him. This transition is part of a comprehensive succession plan, with Morris bringing nearly 40 years of industry experience to the role, aiming to continue the company’s growth and strategic initiatives, including the ‘Customers for Life’ strategy.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.